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Susan Minichiello photo | Sidney Herald Welders give an update on the market Oilfield Wives of Williston, N.D. share their stories Oil refinery coming to Fairview First American refinery in 30 years Inside scoop on the Montana Energy Conference held in Billings 310 2nd Ave. NE, Sidney, Montana • 433-2403 • www.sidneyherald.com The 19th semiannual issue Sunday, May 18, 2014 Special Supplement to the

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Page 1: Sh tappin the bakken may 14, 2014

Susan Minichiello photo | Sidney Herald

Welders give an update on the market

Oilfi eld Wivesof Williston, N.D. share their stories

Oil refi nerycoming toFairviewFirst American refi nery in 30 years

Inside scoop on theMontana Energy

Conferenceheld in Billings

310 2nd Ave. NE, Sidney, Montana • 433-2403 • www.sidneyherald.com

The 19th semiannual issueSunday, May 18, 2014

Special Supplement to the

Page 2: Sh tappin the bakken may 14, 2014

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Page 3: Sh tappin the bakken may 14, 2014

Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 3

By Steve Bullock

MonTana governor

Recently, the U.S. officially became the top energy pro-ducing country in the world. Undoubtedly, Montana, with an abundance of energy resources — both traditional and renewable — has played an important role in this accom-plishment. I believe we can continue to use Montana’s vast energy resources to create good-paying jobs for Montanans and support for our schools, while safeguarding our qual-ity of life.

I am happy to report that news from the energy front in Montana is good. Bakken development continues to forge ahead as Montana oil production was up more than 10 percent in the first quarter of 2013 compared to the same time last year.

It’s well known that this high level of oil production has been creating major economic opportunities, but has also created community impacts that are straining the ability for some local government to provide basic services. My administration is responding to these needs by working to provide critical resources in a number of areas to help communities keep up. We’re making unprecedented invest-ments in eastern Montana, including:

• Nearly $16 million provided for infrastructure devel-opment for eastern Montana through the Treasure State Endowment Program (TSEP);

• $22 million in aid for school districts to address the

needs of school districts in Montana’s oil and gas counties;• $2 million in restored workforce training funds that

were eliminated by the 2011 legislature; and• $5 million available for road construction in communi-

ties facing rapid growth.It’s nice to see industry rising to the challenge in the

Bakken as some big, new infrastructure projects have tak-en place. The recently completed ONEOK Bakken natural gas liquids pipeline will bring in an estimated $12 million annually in property taxes.

Denbury Resources and Magellan Petroleum will be using CO2 flooding to stimulate production in the Bell Creek and Poplar Dome fields. Both companies believe that prospects are high for bringing large volumes of oil to the surface. Denbury has built a 232 mile CO2 pipeline, the Greencore line, from Wyoming to Montana’s Bell Creek field, which has now been filled with a pure stream of CO2

from a gas plant and other sources in the state. I believe the Keystone XL Pipeline will help lead us to

energy independence. That’s why, in my first month in office I took action to ensure that President Obama knew that I strongly support the Keystone XL Pipeline project. And just a few weeks later, I wrote another letter to the U.S. State Department, again expressing my strong support — provided the pipeline is developed as it should be. That means:

• Ensuring that Montana’s top industry, production agri-culture, as well as our waters and wildlife habitats, will not be adversely affected.

• Taking into account the safety and security of the pipeline, the workers who will construct it and the com-munities it will pass through. An incident like the pipeline breach that spilled over 60 thousand gallons of oil into the Yellowstone River cannot be allowed to happen again.

• And it is imperative that the private property rights of Montana landowners be respected.

This past legislative session, energy issues were front and center. I signed bills making it easier to move wide loads on our roads, permit new gravel pits and temporarily lease water rights — all of which should help our booming oil and gas development and make government more ef-fective. We expanded the scope of our Renewable Portfolio Standard which is designed to encourage new renewable power production.

Affordable energy is — and will continue to be — impor-tant in driving our economy and powering our communi-ties. I am optimistic about Montana’s future, and energy development is sure to be a key component of my econom-ic development blueprint. I look forward to tackling the challenges we face and charting a course to create strong and healthy communities in Montana.

Governor salutes state’s energy industry

‘My administration is responding to these needs

by working to provide critical resources in a

number of areas to help communities keep up.’

Steve BullockMontana governor

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4 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

By Jon teSter

U.S. SenaTor

It’s no secret that eastern Montana has one of the fastest growing economies in the nation. That’s thanks to the hard work of our oil workers, our oil companies and everyone who helps to responsibly develop our rich, natural resources.

The work they do every day brings us closer to energy independence. But they’re also providing an economic boost to Montana.

Jobs are coming to the Big Sky state. Folks are being hired every day to work on rigs, provide transportation and support our energy economy.

With an unemployment rate of less than 2 percent in eastern Montana — well below the national average — wages are rapidly rising and Americans are flocking to

the region to pursue these new, high-paying jobs. This economic boom is great for the local economy

and our nation’s energy independence, but the influx of people that comes with it is putting a significant strain on the region’s infrastructure, schools and security.

That’s why I’m pushing bipartisan legislation that would reduce the regulatory burden on small public housing agencies — especially in eastern Montana — so they can more easily provide affordable housing.

It’s also why it’s time for Congress to pass a new highway bill to make sure trucks can get around the oil patch safely and efficiently. And it’s also why I’ll keep pushing for federal support to improve safety in the region, including Justice Assistance Grants (JAG). JAG funding supports local governments so they can beef up public safety.

Eastern Montana’s oil industry continues to grow. That’s a good thing, and it’s one reason why I support responsible construction of the Keystone XL Pipeline.

With its on-ramp in Baker, the pipeline expands the market for Bakken oil, creates more jobs in the region and frees up rail capacity for agricultural products.

Thanks to our oil workers, eastern Montana is moving forward. The energy they produce increases our energy security, strengthens our economy and creates jobs.

By providing more of our own energy, we will rely less on other countries to power our businesses, our schools,

our hospitals and our homes.I’ll keep looking for more ways to responsibly support

Montana’s oil industry so they can continue their good work creating jobs and improving our economy.

Thanks again for your hard work to make Montana all it can be.

tester pushing for legislation toimprove housing, public safety

‘the work they do every day brings us closer to

energy independence. But they’re also

providing an economic boost to Montana.’

Jon tester U.S. senator

‘It’s also why it’s time for congress to pass a

new highway bill to make sure trucks can get

around the oil patch safely and efficiently.’

Jon tester U.S. senator

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Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 5

By Steve DaIneS

U.S. repreSenTaTive

The best part of my job is getting to travel across our state and hear Montanans’ ideas about how we can grow our state’s economy and create more good-paying Mon-tana jobs.

I’ve spent nearly three decades in the private sector, and I know that there’s no better place to live and work than in Montana.

Our state holds unique opportunities for business and economic development.

We are seeing this firsthand in eastern Montana, where our growing energy sector is creating thousands of new, good-paying jobs, injecting millions of dollars into our

state and local economies, and allowing for more young Montanans to put their training and education to use here at home.

The Bakken field holds tremendous opportunities for Montana jobs and Montana’s economy. But as many east-ern Montanans have shared with me, this growth has not come without its challenges.

One of the major barriers facing our state is infra-structure. We need to encourage investment in energy infrastructure to transport our resources, as well as the infrastructure necessary to sustain the unprecedented economic growth we have experienced. This includes roads and water and sewer, as well as strengthening our schools and health care facilities. Without better improve-ment in infrastructure, local community resources will continue to be strained and valuable Montana energy pro-duced in our state will have no way to get to the market.

We also need to ensure that we have policies in place that encourage the responsible development of our state’s resources, rather than hold it back. Too often the federal government gets in the way of responsible resource development in our state. The pace for permitting on federal lands is months longer than permitting on state and private land. Moreover, energy developers are fac-

ing a serious threat due to additional listings under the Endangered Species Act, like the Greater Sage Grouse, due to the Administration’s closed-door settlement with fringe groups.

In Congress, I’m working toward bringing more trans-parency to federal land management decisions and fight-ing to move forward House-passed legislation that pro-tects states’ rights to regulate hydraulic fracturing within their borders. I’m also working toward common sense reforms to the federal permitting process that would help expand energy development and create good jobs in Montana.

And after more than five years of waiting, it’s time for the permits for building the Keystone XL Pipeline to be approved. The Keystone XL Pipeline means hundreds of good-paying Montana jobs and lower energy costs for Montana families — it’s time that President Obama gets out of the way and allows the Keystone XL Pipeline to be built.

As Montana’s representative, I know how important our energy sector is to our state, and I’ll keep fighting for common sense solutions that help grow our economy, create jobs and keep energy prices low for hard-working Montana families.

Montana is setting an example of how domestic energy development can be done in a responsible manner. And through the construction of the Keystone XL Pipeline and continued exploration and development of the Bakken, I am confident that Montana will continue to lead the way.

Daines says economic opportunities in Bakkencome with many challenges in eastern Montana

‘We need to encourage investment in energy

infrastructure to transport our resources, as well

as the infrastructure necessary to sustain the

unprecedented economic growth

we have experienced.’

Steve DainesU.S. representative

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6 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

By John WalSh

U.S. SenaTor

The hard-working people developing our state’s natural resources built Montana. With our energy resources in particular, Montana can create responsible, quality jobs and lead our nation to energy security.

First, we need to move forward with the Keystone XL Pipeline, including the on-ramp in Baker, to ensure Mon-tana oil is getting to market. Construction of the pipeline is a strong example of how we can take our Montana work ethic and create jobs, improve infrastructure and ensure our working lands and world-class recreation.

The construction and maintenance of this pipeline must be done responsibly and efficiently. We must have an

emergency response plan in place, and we must protect the rights of private landowners and ensure that safety and environmental standards are met. And the best-qual-ity materials possible must be used — materials made here in the United States of America.

This is a long-overdue project that has broad, bipartisan support. The time has come to build this pipeline and provide stability, security and create the American jobs we need.

Our work toward energy security and job creation should not stop with the Keystone XL Pipeline. We should always look toward ways to responsibly use Montana’s resources — traditional and renewable — to stay in the driver’s seat of the world’s energy future, creating good jobs along the way.

I will work to make sure local communities are receiv-ing the proper support for improvements to infrastruc-ture. That includes, clean sewers, safe roads and strong bridges. Increased economic activity should leave our communities stronger, not weaker.

Bakken oil activity is also an exciting opportunity to improve investments in education. If we want to educate our workforce for a 21st century economy, we need to take

advantage of increased development and upgrade our 20th century facilities. My position on the Senate Com-merce Committee gives me a unique position to oversee and encourage infrastructure development that will keep pace with the development of the Bakken formation.

Montanans deserve leaders who will advocate for guar-anteed job growth, invest in infrastructure and strength-en education in our state. As your senator, I will continue to fight for the construction of the Keystone XL Pipeline and advocate responsible development of our natural resources in Montana.

Walsh: time for country to moveforward with keystone Xl Pipeline

‘this is a long-overdue project that has broad,

bipartisan support. the time has come to build

this pipeline and provide stability, security and

create the american jobs we need.’

John WalshU.S. senator

‘I will work to make sure local communities are

receiving the proper support for improvements to

infrastructure. that includes, clean sewers, safe

roads and strong bridges.’

John WalshU.S. senator

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Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 7

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Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 11

By travIS kavulla

pUBlic Service coMMiSSioner

The Bakken is roaring, and the region’s utility infra-structure is struggling to keep up.

In the past three years, electricity sales more than doubled for the Upper Missouri Generation & Trans-mission Electric Cooperative, the primary wholesaler of electricity to member-owned utilities throughout eastern Montana and western North Dakota. The co-ops have been able to site and build natural-gas generators and wind farms with relative ease. No one’s lights are going out because of a lack of supply.

Getting that power where it needs to go has proved difficult, however. One 345-kilovolt line that must pass through the national grasslands in North Dakota has been impeded by the difficulty of siting anything (especially transmission lines) on federal lands. Basin Electric Power Cooperative reports that if lines like this are not built, its transmission system will not have sufficient capacity to meet the coming years’ expected growth in demand. The co-op is discussing strategies with the oil and gas industry to vary “load timing” and to consider alternatives that might relieve some of the pressure on the grid.

Montana-Dakota Utilities, which serves urban areas and is regulated by the Montana and North Dakota pub-lic service commissions, is also feeling the twin pres-sures of growing demand and last year’s extremely cold winter. From November to February, it fired up power plants in Miles City and Glendive that, in the previous winter, were entirely dormant.

Telephone and broadband providers are also in a pinch. In Sidney, CenturyLink ran out of high-speed T1 capacity last year. In order for you to get the service, someone else needs to give it up — at least until new fiber facilities are installed.

All this means is that there will be more investment by utilities as they put up poles and wire, build power plants, and trench fiber. To keep service reliable, they will have to compete to draw workers from the same labor force that is in demand in the oil patch.

What will happen to consumer rates? There are two sides to that coin: More investment could mean higher rates, but ideally they will be offset by the addition of new customers. One guiding principle we have at the PSC is that the person who caused the cost to be in-curred, should pay for that cost. Residential consumers should not be cross-subsidizing the oil industry which is the primary force driving the need for investment.

Already, a lot of elderly and fixed-income residents of

eastern Montana and western North Dakota have seen their longtime hometowns become uneconomical for them to continue living in. They can no longer afford the groceries, the rent, you name it. Utility bills should not be added to that list.

As well, there is the risk of so-called “stranded costs,” which occur when a utility makes an investment that is scheduled to be paid for through consumer rates over a 30-year time frame — but then the customers they built it for leave after 5, 10 or 20 years. The last oil boom came and went quickly and left many such problems. This one will stick around longer, but utilities need to be thought-ful about what costs should be required to be paid up-front and vigilant that the right people are paying the bills.

If you have an energy or telecommunications prob-lem, the Montana Public Service Commission is here to help. Call us or write anytime. My direct line is 406-444-6166.

Travis Kavulla (R., Great Falls) is a Public Service Commissioner representing 19 counties in eastern, central and northern Montana.

Public Service commissioner says infrastructurestruggling to keep up with Bakken’s activity

larene grondaHl | Sidney Herald

Three Nabor’s drilling rigs seen nearly in a row near Williston, N.D.

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12 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

By JeSSIca Sena

MonTana peTroleUM aSSociaTion

“I am following in my father’s foot-steps as he has been a landman since the first boom of the 80s. He would lay out his maps on the floor and my sister and I would help him to color tracts, so I can claim that I have been in the industry most of my life.”

After graduating high school, Ni-cole Gorham, Billings, went to work with her father in the Powder River Basin when the coal bed methane play was very active. “He threw me right into looking at documents that first summer, as soon and he felt I was ready,” Gorham said. “He and I worked together off and on while I was going to school and continued after I graduated [college] in 2005.”

Interestingly enough, Gorham’s educational path into the oil patch was anything by ordinary. She start-ed at Montana State University in the field of genetics and biotechnology. However, she explained, “My lack of study skills caught up with me by my third year, and a graduate-level microbiology class pushed me over the edge.” In order to stimulate both hemispheres of her brain, Gorham said, she began taking classes in art, philosophy and religion. After being made aware of a new program by one of her favorite instructors, she became a member of the first gradu-ating class with the science, environ-ment, technology and society option in the history field.

The life of a landman isn’t some-thing everyone is cut out for – Gor-ham says that landmen are often left to ride the tide of a resource play, spending many hours on the road, in courthouses and in hotel rooms. And since most landmen work as contrac-tors, a life in this career is likely to involve a lot of travel, chasing resource plays and available contract jobs as they become available. But

for Nicole, the landowners, flexibility and freedom to work from home and schedule her own hours, make it all worth it.

Today, Gorham owns her own busi-ness in Sidney, NRG, which she says was created out of necessity in 2011.

She explained that at NRG, “Our clients range from local landown-ers to major oil and gas companies. A landowner may seek advice on a contract that an oil company has offered him. We keep a good pulse on oil and gas activities in the Bakken and beyond.”

NRG assists land and/or mineral owners in understanding legal terms in their leases or agreements, and when mineral ownership is called into question, NRG can provide clari-fication of ownership.

“For oil and gas companies, we can handle nearly every need they may have, from running the mineral title and contacting the current mineral owners of record to obtain leases, to meeting with the landowners to work with them to place well loca-tions on their property,” Gorham said. She feels confident her skill set and experience in the field gives her company a leg up on newer competi-

tion, especially. Because NRG represents both

companies in the industry, and the land or mineral owners, Gorham says, “We are able to remain sensitive to the needs and perspectives of both. We feel that this results in better communication and an end product that fulfills the needs of all parties involved.”

When asked about working in a male-dominant field, Gorham said, “Some clients prefer to hire women, as they make excellent landmen. Their work is often neater and more precise. Also, when it comes to negotiations, women tend to be more personable. The feminine aspect is an absolute asset for a landman.”

In addition to owning her own business, Gorham serves as the president for the Montana Associa-tion of Professional Landmen, an organization centered on network-ing, education and accountability for landmen within the state. According to Gorham, there are approximately 200 active members including both company and field landmen.

When asked which regulatory and/or policy issues were most press-ing to landmen, Gorham responded passionately about licensing. Much of what landmen do in working with title comes easy to a realtor or an attorney who are required to main-tain education credits to work in their field; landmen, however, are not held to that same standard, Nicole explained, adding that many in her field support the status quo. She, on the other hand, says that she believes licensure for landmen adds account-ability and holds all to the same professional standards and ethics.

Like any career, working in the oil and gas industry comes with its share of tradeoffs.

“I was living with my sister in Mis-soula for a while and opted to refer to

Fourth-generation Montanan says she comes from long line of landmen

Nicole Gorham owns NRG in Sidney.

See GorhaM, page 13

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Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 13

my job as a title examiner, leaving off the oil and gas part. Doing that avoided pre-judgment from uninformed indi-viduals.”

Gorham’s reluctance to share the details of her job with just anyone reflects the polarized and controversial nature that has come to define the petroleum industry, in spite of its many contributions – economic and otherwise.

“I generally enjoy what I do,” Nicole said. “However, the entrance of an oil and gas play means different things to different people. For those that see it as a blessing and a needed source of income or the realization of the dream of their parents and grandparents before them, my job is a dream. Others see its presence as a burden and would prefer the time before oil was found in their town.”

Gorham seeks to combat negativity about the work she does by trying to help people see how their role plays a part in the greater picture of prosperity for their community and the nation as a whole. To those who voice opposition to the industry, drilling, or people like her, she offers this advice:

“Step back and see that change has always occurred, and to place judgments of ‘good’ or ‘bad’ is failing to see the big picture. Yes, things are certainly different. Before the boom, Sidney subsisted on sugar beets, coal and cattle. None of that has changed. In fact, some farmers and ranchers who were once barely able to make ends meet are now able to maintain their lifestyle due to the supplemen-tal oil income. However, with those checks come the traffic, the dust and the increased price of goods. Over time the trucks will lessen, along with the dust and the prices will adjust. Patience is required.”

In speaking with Gorham about the rise in anti-frac-

turing (aka “fracking”) movements across the country and their effect on public policy, she offered the following explanation:

“There are people who love the availability of abundant and affordable energy present in our country, but would prefer it to happen in someone else’s backyard. Those protesting the drilling of the Beartooth front deem that land to be somehow more sacred or worthy than northeast Montana. But each person loves his home with his whole being. We all have to do our part.”

When asked what she’d be doing had she not followed in her father’s footsteps, Gorham responded, “I began the Master’s program for elementary education as I genuinely enjoy working with children. However, I found that I have become accustomed to the lifestyle and freedom that being a landman affords me, so I swallowed three semesters of grad school loans.”

What does her future hold? Within 10 years, Gorham plans to have children, a home with a place for chickens, a huge garden and river access, but adds, “Where that will be, only time will tell.”

FroM PaGe 12

Gorham: patience is required with current conditions in area

By BIll vanDer Weele

Sidney Herald

After a lot was made available at the Richland County Fairgrounds last September, CDL testing in the area has become much smoother, LaNette Simonton, driver exam-iner office, recently told Richland County commissioners.

Last year, some individuals needed to wait three months until they could have their CDL test. The time period now is only a week or two.

“Someone can work in a couple of weeks, they don’t have to wait. Isn’t that amazing!” Simonton said. “Our goal is to have a test in the morning and do the driving portion in the afternoon.”

There are now four examiners in the area compared to only one or two in the past. Simonton said a CDL auditor described Richland County’s site as the best for testing in Montana.

“We’ve got the schedule so it’s not a long wait anymore,” Simonton said. “The greatest thing is we have a place to do it.”

Commissioners approved the land for CDL testing with the understanding that it will be utilized as a parking lot during the fair or other bigger events.

“It’s a win-win for everyone,” Simonton said. “If it wasn’t all of us working together, it wouldn’t had been possible.”

To celebrate the achievement, a free barbecue is sched-uled at the location from 11 a.m. to 3 p.m. July 10. Hallibur-ton is supplying the cook wagon and cook. The company will also have a couple of trucks on display. Miles Commu-nity College will have a truck simulator at the event.

Simonton and Richland County Commissioner Duane Mitchell are urging other truck companies to also have outfits on display during the free barbecue.

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14 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

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18 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

By SuSan MInIchIello

Sidney Herald

At the Montana Energy Conference in Billings, a county commissioner from Pennsylvania’s oil country, a Montana economist and an Oasis Petroleum representa-tive weighed in on ways to meet infrastructure needs in new energy areas, particu-larly in the Bakken.

Dr. Patrick Barkey, director of the Univer-sity of Montana Bureau of Business and Economic Research, provided an economist’s insight on the Bakken.

“In every state, we can measure growth by the increase in total payrolls,” Barkey said.

In 2012, North Dakota payrolls expanded by $2.2 billion in one year, which

Barkey pointed out was sig-nificantly higher than other more populous states.

Barkey also compared payrolls in four counties in the MonDak region: Rich-land and Fallon counties in Montana and Williams and Mountrail counties in North Dakota.

Over the last 13 years, North Dakota grew slightly more than double the rate of Montana, and oil counties in both states grew above its state average.

Richland County grew three times as much as Mon-tana’s average, and Moun-trail County grew four to five times faster than North Dakota’s average. North Da-kota is the fastest growing state in the country. “Gee whiz. Remarkable numbers coming out of this part of the country,” Barkey said

The evolution of this economic growth happened in two phases, Barkey said. Before the recession, in the 2001-2007 time period, Montana grew, on average, a little bit faster than North Dakota. “It was more of an apples-to-apples compari-son,” Barkey said.

After 2007, Montana suf-fered through the recession experiencing negative and some positive growth for a few years, with “averages slightly positive.” North Dakota, on the other hand, experienced 8.6 percent growth (adjusted for infla-tion) beginning in 2007, while other states were suf-fering. In North Dakota’s oil counties, the numbers were even higher at that time with an average 36 percent annual growth up until 2013.

At a slide showing Rich-

land County’s economic growth, Barkey noted the numbers were “really re-markable.”

“If you look at the pattern growth, particularly over the years of the recession, you can see that growth did stall out a little bit in Sidney, and then you saw fast growth resume,” Barkey said.

Richland County’s economy has now grown to be three times bigger than it was back in 2001.

Williams County (home to Williston) has even more rapid growth with no evi-dence of the recession. The growth was so rapid and high that Barkey was unable to fit it on the graph of his slide. According to Barkey’s most recent date, the Wil-liams County’s economy is

SUSan MinicHiello | Sidney Herald

The Bakken infrastructure panel at the Montana Energy Conference in Billings in early April included, from left, Kent Beers, senior vice president of land, business development and government affairs with Oasis Petroleum; Dr. Patrick Barkey, director at the University of Montana Bureau of Business and Economic Research and Doug McLinko, commissioner of Bradford County in Pennsylvania.

Dealing with increased infrastructure needs

See WaGeS, page 19

Page 19: Sh tappin the bakken may 14, 2014

Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 19

10 times bigger than it was in 2001 and Mountrail County’s economy is 7.5 times bigger than it was in 2001.

“So do we have some infrastructure problems involved here? I believe we may,” Barkey said. “This is really a large stress. It’s certainly been a huge engine of change in those areas, which we all know.”

One area that has been stressed by the exceptional economic growth, Barkey pointed out, is labor markets. Richland County residents know all too well the retraction of services, particularly in the food service and hospitality industry.

Barkey measures the increase in average wages in Richland County for every job in the economy. “Some are part time, some are full time. Some are in mining extraction occupations, others accommodations, others are

government. The average annual wage in Richland County was $30,000 in 2004, and it increased to $51,000 in 2013. In comparison to Montana, Richland County was actually lower than the state average in 2004, but in 2013 the county is 38 percent higher paying than the state.

In North Dakota, wage increases are even more pronounced, from $33,000 to $78,000 in Williams County from 2004 to 2013. Williams County is 65 percent higher than North Dakota’s average annual wage, which has also grown.

“There you’re seeing more than double in the average pay per job, a real remarkable occurrence,” Barkey said.

Fallon County, which is technically not in the Bakken but is still an oil producing area, and Mountrail County, have “traditionally been a rather low paying part of the country” but has also seen wage increases above the state average.

“That’s all the oil people — they’re making big money and they’re pulling the average up, and that’s certainly true, but it’s also propagated beyond the oil field,” Barkey said.

As an example, Barkey showed that in Richland County, the accommoda-tions or hospitality field wages also grew from $10,000 to over $17,000 on average.

“That’s been pushed up, of course, by the big explosion of job opportunity in the oil patch and the conflict of short-age of workers and stress on the labor markets,” Barkey said.

Another part of the region’s econ-

omy that is stressed is housing. In Richland County, housing prices were 158 percent higher in 2012 than they were in 2008.

The last aspect of oil impacted econo-mies Barkey discussed was the high-way system, with information he pro-cured from the Montana Department of Transportation. There was between 16-37 percent increase in traffic by 2011 in eastern Montana counties. Even in just a two-year span, between 2010 and 2012, there was a huge increase in traf-fic in Richland County, most of which was due to commercial vehicles and trucks.

Barkey also noted roads suffer significant degradation in the Bakken because they are being used beyond their design capacity.

“The development of the Bakken has been an enormous economic event,”

Wages: average pay much higher in Williams, richland countiesFroM PaGe 18

SUSan MinicHiello | Sidney Herald

Doug McLinko, chairman of the Bradford County Board of Commissioners, spoke about how his county dealt with infrastructure challenges around energy activity.

‘there you’re seeing more

than double in the average

pay per job, a real

remarkable occurrence.’

Dr. Patrick BarkeyBureau of Business and economic research

See conFerence, page 20

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20 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

Barkey said. He added that he hoped his numbers could help frame a discus-sion for how to meet infrastructure needs.

Doug McLinko, chairman of the Bradford County Board of Commis-sioners in Pennsylvania, spoke after Barkey about his support of energy development. McLinko said he sup-ports “fossil fuels 100 percent, whether it’s mining, drilling...”

He said natural gas in his county “has been a complete blessing.” Brad-ford County is next to New York state, has a population of 65,000 and is the most drilled on in Pennsylvania with 2,000 oil wells, 1,000 miles of natural gas gathering lines and an expected 800 billion cubic feet of natural gas gathered this year.

“We can talk about what the pres-sures of traffic were, how we worked with the industry,” McLinko said. “We did work with them. We held town hall meetings with elected officials, we did a wide open with our constitu-ents, with landowners, and by being open and honest and working with the industry, I think we have a lot of problems that make people very un-comfortable with energy development in Bradford County.”

The last speaker was Kent Beers, senior vice president of land, business development and government affairs at Oasis Petroleum, which is the third largest producer in Montana.

“We understand that our success and the success of other companies certainly has contributed to both the fi-nancial success...But also the challeng-es and difficulties that the counties in the impacted areas are facing, so what can we do about it?” Beers said.

His question was rhetorical and well-intentioned. He answered it himself by explaining that Oasis Petroleum has a long term view when it comes to build-ing relationships with oil-impacted counties.

“We’re not going to build sewage treatment plants and hospitals and schools, we’re not going to do that, but we do support these cities in every way

we can,” Beers said.In the last year and a half or so,

Oasis Petroleum has given about $250,000 to schools, day care facilities, fire departments and junior achieve-ments. The company has also invested $1.25 million toward helping some of the infrastructure issues, including road repair and maintenance and dust control.

“We encourage our employees to be-come a part of the communities, join civic groups, volunteer,” Beers said.

Oasis also has pipelines for saltwater disposal to eliminate trucking as much as possible.

Another way Beers said Oasis Petro-leum tries to aid with infrastructure needs is by meeting with county com-missioners and communicate what

they’re doing and also by working with state officials in Montana and North Dakota.

“It doesn’t solve all the problems, but they appreciate it and we appreciate them working with us,” Beers said.

Richland County Commissioner Duane Mitchell was present for this panel and asked a couple of ques-tions after the speakers finished their presentations and were answering audience questions. Armed with the experience of the last oil boom and bust in Richland County of the late 1970s and early 1980s, one question Mitchell asked was, “What would kill this boom?” Beers replied, “I don’t forecast that.” Beers later noted that even “Billings is booming, even though it’s 300 miles from the Bakken.”

conference: company encourages employees to be part of communityFroM PaGe 19

SUSan MinicHiello | Sidney Herald

Kent Beers of Oasis Petroleum talks about how his company is aware of energy boom impacts on communities and attempts to help.

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22 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

SUSan MinicHiello | Sidney Herald

Jimmy Oaks welds together a piece of pipe together at the shop. Oaks works for Dynamic Energy Services in Sidney.

By SuSan MInIchIello

Sidney Herald

Off a quiet, dusty county road in Sidney just past the MDU bridge, the sun shines in the cloudless sky on a group of welders blaring pop music while working on welding pipeline in a barn-like shop.

Wearing protective, heavy yellow leather jackets, gloves and Miller digital welding helmets, the men stare intently with a carefully guided hand, melting the metal welding stick into the pipeline pieces.

It takes four layers of welding sticks to securely weld a pipeline piece. The parts of a pipeline are heavy; lifting is also a part of the job, and once a

pipeline is welded together a machine lifts it in the yard.

The men in the shop work for Justin Hathaway, Dakota Welding Services, Inc., and Cory Roland, Dynamic Ener-gy Services, Inc. Hathaway and Roland are friends and business alliances who pull their resources together to help each other out. Each company has about eight workers with a low turnover rate.

“Your body, your mind has to be able to withstand not only the physical part of work, but also the weather,” Roland said of welding.

Hathaway and Roland each have 15 years of welding experience. Roland has a background working more in plants and Hathaway’s experience was

more in refineries and boilers.“I think with our combined knowl-

edge of a lot of stuff we have a more broad knowledge of the field,” Hatha-way said.

With an oil boom, welding busi-nesses boom, too. Aside from welding, the company also does trucking, gaug-ing services and equipment rental services. A new joint venture for the companies is working on cranes.

“You have to expand in order to grow,” Roland said. “The more that we can take on as one project, the better we can be at what we do, having not so many middle men in front of us or behind us.”

Even as their companies grow and

Welders sees changes in market during last five years

See coMPany, page 23

Page 23: Sh tappin the bakken may 14, 2014

Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 23

expand, they still remain small, something Roland values. He noted that “there’s a lot of loyalty and a lot of respect amongst one another, they’re not just a number.”

Over the years, Hathaway and Roland have observed changes in the welding market in the Bakken. Ha-thaway moved from Burke, S.D. to Sidney in 2009 and Roland moved from Great Falls to Sidney in 2006.

“When we first got here and this boom started, it was whoever they could get, whatever cost, just get ‘em, just get the work done. The quality control wasn’t there,” Hathaway said. “The groundwork wasn’t put in place yet.”

“No means to the mad-ness,” Roland added.

“At that time, the money was crazy then,” Hathaway said.

Today, the madness isn’t as crazy and oil companies have a more widespread va-riety of contracted welders to choose from. Hathaway described today’s welding market as “flooded with contractors,” which tight-ens the market.

One beneficial change is that the welding market is more structured with a higher focus on quality control compared to how it was five years ago.

“There’s just more things in place now. Companies have budgets and more of a plan, a scope of work before you actually start a proj-ect,” Roland said. “It makes everything more competi-tive.”

Another benefit with more structure in the welding market is getting false advertisers sorted out — people who have a sticker on the side of their truck claiming to weld or do

mechanics but not actually knowing how to do it. Word gets around when there’s a fake in the mix.

“As many people are up here, it’s still a small world,” Roland said.

“We’ve noticed if you goof up here, or you get caught lying, stealing, cheating, gauging, immoral practices in business or the oilfield, we’ve found that you’re kind of the talk of the Bakken and you’re sorted aside pretty quick,” Hathaway said.

Roland added, “It goes by word of mouth relatively fast...The people that are up here now have a fairly good reputation.”

Hathaway said he thinks the welding market is going to change, with talks about oil in Midland-Odessa, Texas and that it’s possibly better quality than Bakken crude.

“We feel that the market maybe have been flooded a little bit right now, and the work’s a little harder to compete with, but we also feel that a lot of the guys that are from that way and have wives and kids and

families, and are gonna go back down that direction,” Hathaway said.

Some of Hathaway and Roland’s clients include Hi-land Partners, XTO Energy, SM Energy, Oasis Petro-leum and EOG Resources.

“The customers that we do business with just love us to death, love doing business with us. We really haven’t had any problems,” Hathaway said.

Hathaway said working out of a small town like Sidney is beneficial because there is accountability in small towns.

“When I look you in the eye, I say a deal’s a deal,” Hathaway said. “We’re not going to come in here, promise you the sky and give you peanuts for re-sults.”

Both men feel that busi-ness is going well and have a “glass half full” attitude about future business pros-pects.

“This is our livelihood, this is what we built from when we were young men,” Roland said.

[email protected]

company: Benefits from working out of small town like SidneyFroM PaGe 22

SUSan MinicHiello | Sidney Herald

Justin Hathaway, Dakota Welding Services, left, and Cory Roland, Dynamic Energy Services, have a business alliance.

SUSan MinicHiello | Sidney Herald

The welding market in the Bakken is less hectic than it used to be. Welders notice more competition and quality control today.

Page 24: Sh tappin the bakken may 14, 2014

24 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

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28 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

By SuSan MInIchIello

Sidney Herald

The heads of Oasis Petroleum and Whiting Petroleum participated in a panel at the Montana En-ergy Conference in Billings April 3 to discuss energy possibilities.

Thomas Nusz, chair-man and CEO of Oasis Petroleum, and James Brown, president and COO of Whiting Petroleum, were moderated by Niles Hushka, president and CEO of KLJ, a sponsor of the conference. Nusz has 31 years of experience in the oil and gas industry and is a member of the National Petroleum Council, an advisory committee to the U.S. Secretary of Energy. Brown has nearly 40 years of experience, beginning his career with Shell Oil in 1975.

A good portion of the pan-el was audience members openly asking questions. One audience member inquired about the business risk in seeking economic opportunities in energy.

“Keep in mind that this is — at least in the areas that we’re playing in — is resource play in a tradi-tional sense, so effectively, it’s oil everywhere,” Nusz said. “It’s just a function of what’s the oil cut and what’s the water cut...If you drill a well that’s 100 percent water, you’ve done something wrong. It’s hard to do.”

In the deeper part of the basin, there is about 750,000 barrels of oil equivalent of recovery.

“It’s managing your economic and mechani-

cal risk, not so much your dry-hole risk,” Nusz said. In addition to that, managing the business risk associated with takeaway capacity and the movement of barrels and looking at what infra-structure is in place.

“And of course, rail is getting to be a huge part of that,” Nusz added, echo-ing a theme among many conference speakers that week. “It’s 700,000 barrels a day, probably more than that, that moves out of the basin by rail. If something, for whatever reason, if something were to happen to shut that down, that’s a massive, massive business risk for us.”

Brown added that since he started working in oil 40 years ago, the drilling risk “has been taken essentially

to zero.” “In the Bakken, in the

Williston Basin, I can’t even remember the last dry hole we drilled,” Brown said. “It just doesn’t even enter in the equation.”

Another audience mem-ber asked Brown about Whiting Petroleum’s posi-tion in the Powder River Basin and whether or not the company expects to expand there.

“Right now we’re going to stay where we are,” Brown said. Whiting Petroleum currently has a field in the Powder River Basin called Jepson/Holler Draw.

Another person inquired about any possible second tertiary plans. Brown noted that a good amount of oil stays in the ground after primary recovery, about 85

percent.“We’ve spent a fair

amount of time work-ing on what can we do to get additional oil out of the ground,” Brown said. “What we’ve found is that Bakken oil is very missable. It’s missable with CO2, and it’s also incredibly missable with methane, which I guess shouldn’t surprise us just based on the difficulty we have separating the oil and the gas up there.”

Brown added that since the first thing done to new Bakken wells is fracking, it’s “probably the worst thing you’d ever want to do if you’re trying to do a tertiary project in here.”

“I think over time, with technology, people will figure out ways to do it,” Nusz said.

petroleum ceo provides insights on opportunities

SUSan MinicHiello | Sidney Herald

Oasis Petroleum CEO Thomas Nusz, left, and James Brown, president and COO of Whiting Petroleum, address an audience at the Montana Energy Conference.

Page 29: Sh tappin the bakken may 14, 2014

Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 29

By SuSan MInIchIello

Sidney Herald

Robert Rowe, president and CEO of Northwestern Energy, was the keynote speaker during the lunch banquet at the Montana Energy Conference April 2. Issues he touched upon included safety, investments and his company’s role in Montana’s economy and communities.

Northwestern Energy is a utility company that serves Montana, Ne-braska and South Dakota. It is based in Sioux Falls, S.D.

“Montana-Dakota Utilities, or Montana-Dakota Resources, is one of the very few utilities anywhere in the United States that’s successfully diversified,” Rowe said. “As a utility, you’re making very, very long-term investments in resources and assets that are publicly regulated, so we care a lot about good public policy.”

Rowe listed one challenge his com-pany faces is finance in the long term, about 15 or 20 years down the road, and predicting, then observing re-covery costs of investments. Another challenge he discussed was paying for permanent costs of fixed price as-sets and dealing with infrastructure needs.

“We’re a long way from perfect. We’ve got a lot of work to do as a com-pany. In Montana, people have very, very strong opinions about energy and about utility service,” Rowe said.

Some highlights Rowe listed from 2013 were the company’s safety performance and customer satisfac-tion scores were at its highest ever. He emphasize safety as an important company value.

As far as infrastructure and invest-ment goes, Northwestern Energy is investing $2 billion worth of assets “dedicated to serve Montana custom-ers and Montana communities.” He called the large sum “extraordinary.”

“There is no other private sector infrastructure investor...in Montana that reaches that level,” Rowe said.

Northwestern Energy has 2,000 miles of high pressure natural gas transmission that goes “right down the back road of Montana.” The com-

pany also has gas storage, gathering systems and pressurizing stations, which Rowe called a “critical asset.”

“The infrastructure we take for granted is so important, and can be so expensive,” Rowe said. The company does not have overseas assets. “Our investment is right here, in our utility operation.”

In Montana, Northwestern Energy is the largest taxpaying company, dishing out $94.7 million in property taxes in 2013. He called it a “classic double-edged sword” because “local government supports local institu-tions depending on that reliable stream of revenue...on the other hand, the tax burden on our custom-ers in Montana, just because of the nature of the taxes here, is higher than it would be in a lot of other juris-dictions.”

Rowe said the company tries to manage both federal and state tax responsibility to best benefit its cus-tomers.

He also touched upon environmen-tal responsibility, incorporating an acronym more commonly used on gadgets by young people.

“We’re not always B.F.F. with some of our environmental groups,” Rowe said. Yet he noted the importance of environmentalism in terms of the economic development and cultural aspect of it.

Big investmentnorthwestern energy invests $2 billion in utility infrastructure

SUSan MinicHiello | Sidney Herald

Montana Petroleum Association director Dave Galt gave the introduction speech.

SUSan MinicHiello | Sidney Herald

Robert Rowe, Northwestern Energy CEO, speaks about utility infrastructure.

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30 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

By SuSan MInIchIello

Sidney Herald

Pat Callahan, director of gas trans-mission and storage at Northwestern Energy, gave insight on the natural gas market during a panel at the Mon-tana Energy Conference in Billings April 3.

Prices are dependent on a reliable natural gas supply. “If you own it, you can control it,” Callahan said about natural gas supplies and prices. “To-day, what we look for is purchasing properties within Montana.”

Properties with low-risk is impor-tant to Callahan. Eighty percent of natural gas preserves that could prove production with at least five years of producing history with 15 years remaining is ideal.

“We’re not looking to explore things, we’re conservative, we’re not a util-ity,” Callahan said.

Based on purchase price, North-western Energy does an analysis to determine what the gas will cost to its customers. Gas prices spiked in Janu-

ary and February of this year. Dan Hickman, president of Golden

Stone Resources, a petroleum engi-neering consulting and natural gas service company, spoke after Calla-han.

“Up until about 2006, on an annual basis, there was more production on Northwestern Energy system, than there was in rural markets,” Hick-man said. Some Northwestern Energy customers were comparing the supply cost to the gas supply cost in other markets.

After 2008, natural gas production declined.

“With a production decline, gas is going to be at the top of the source elsewhere to meet the demands of the customers,” Hickman said.

Currently, because of pipeline constraints, the majority of gas for Northwestern Energy comes from Canada.

“What that is doing is taking a lot of flexibility, the market, suppliers and the customers have in regards to incremental supply,” Hickman said. There are currently 11 suppliers in Montana.

natural gas prices remain stable

SUSan MinicHiello | Sidney Herald

Dan Hickman, Golden Stone Resources president, discussed the ups and downs of natural gas prices.

SUSan MinicHiello | Sidney Herald

Pat Callahan, Northwestern Energy, spoke about reliable natural gas supply.

‘today, what we look for is

purchasing properties

within Montana.’

Pat callahannorthwestern energy

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Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 31

By SuSan MInIchIello

Sidney Herald

Frack sand isn’t easily obtained from the beach or off the Yellowstone River. It’s a little more complicated than that.

KC Sandcastle and Transport safety advisor Tom Pavek told the Herald that there are two main types of frack sand: natural and manmade ceramic sand, with the manmade sand being the costlier option at around two or three times the price of natural sand.

When put under a microscope, frack sand is cylindrical and has a high crush factor, unlike sand found at the playground or the beach, which looks like crushed glass under a micro-scope. Frack sand can withstand 6,000 PSI (pounds per square inch).

“If it’s not able to be put under that extreme pressure, like 6,000 PSI plus, then it doesn’t qualify as frack sand,” Pavek said. “Some ceramic sands have a crush factor in excess of 10,000 PSI. Frack sand is very specialized.”

There are about four types of natu-ral sand used: 100 mesh, 2040 mesh, 3050 mesh and 4070 mesh. Manmade ceramic sand, which comes in totes from Russia and primarily China, has the same sizes except for the 100 mesh.

“Everybody’s got their idea of what makes a better or worse sand. Every company kind of develops a fracking technique that works for them and a size of sand which seems to be opti-mal for the area that they’re drilling in,” Pavek said. “Even in the Bakken, there are lots of different what we call shale structures, that require differ-

ent types of sand to prop them open.”Pavek estimated around 90 percent

of ceramic, manmade sand comes from offshore, with China being the biggest source. The sand is trans-ported in 4,000-pound tote bags on a boat across the ocean, then on rail or truck. The two main ports for sand are Seattle, Wash. and Houston, Texas.

“For a long time, 90 percent of the sand came here on truck. Now, from what I see, 90 percent of the bag sand’s coming on rail. It’s a switch from truck to rail,” Pavek noted.

Natural sand is made of silica, the most common element in the world (after oxygen).

“The ground is basically broken down silica, there’s just tons of silica in dirt, there’s tons of silica,

SUSan MinicHiello | Sidney Herald

Tom Pavek, KC Sandcastle and Transport, center, shows the sand facility to Liz Ching, Gov. Bullock’s Office of Economic Development.

kc Sandcastle – the place for frack sand

See SanD, page 32

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32 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

obviously in sand, silica’s everywhere. It is the most plentiful, but not all silica works for fracking. The silica that’s formed per-fectly in a natural state is rare,” Pavek said.

Last year, KC Sandcastle and Transport, which is located in Sidney, moved nearly one billion pounds of sand. “Billion with a ‘B’ pounds of sand,” Pavek said.

For many years, KC Sandcastle and Transport worked primarily with Sanjel, a Canadian energy service company with a location in Culbertson. KC Sandcastle and Transport has recently branched out and now also works with

Cut Services, a division of RPC, Halliburton, Liberty and Feela Maare (procures sand for Liberty). There are also a variety of companies KC stores sand for, includ-ing Rainbow Ceramics and Interstate Holdings (which has a sand mine in Wiscon-sin).

“We have both the ability to transload and transport, which makes us unique,” Pavek said. “And we have quite a bit of rail, which positions us nicely.”

In Sidney, the company has about 2,500 feet of track and 1,500 feet in Culbert-son. An expansion made this year is in Casper, Wyo., where the company has 4,000 feet of track.

“In terms of economics

of shipping, you can’t ship anything as cheaply as you can on rail. The per pound freight charges on rail is significantly less than any other type of mass transportation of goods and services,” Pavek said. “There’s a battle for rail around here…that really is the heart, the lifeblood of the Bakken.

KC Sandcastle and Trans-port was founded in 2007 by its co-owners Keltz Hall and Cole Wirth, who have worked in MonDak oilfields in 1991, according to the company website. The com-pany started small, with the founders and one truck.

When Pavek started working with the company in 2009, there were around

10 trucks, 12 drivers and 15 workers in the yard. Today, there are over 100 people employed at KC Sandcastle and Transport and 30 com-pany trucks, with plans for major growth. Aside from expanding its rail options, the company is also expand-ing services and recently began hauling cement.

“There’s two things that you need, really, to frack, and one is water, and lots of it, and sand,” Pavek said. “And they’re finding that the more sand they’re using now, the better the suc-cess is for both IP (initial production) and ongoing production. The more sand that’s being added now, the better the results.”

SUSan MinicHiello | Sidney Herald

Different types of frack sand are on display in an office of the KC Sandcastle and Transport facility in Sidney.

FroM PaGe 31

Sand: Business transported 1 billion pounds of sand during 2013

Page 33: Sh tappin the bakken may 14, 2014

Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 33

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36 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

By SuSan MInIchIello

Sidney Herald

Oil drilling in eastern Montana remains steady, along with the price of oil.

In 2013, 258 oil well permits were issued in Montana, with 125 of those permits issued in Richland County and 36 in Roosevelt County. Other Montana counties with a notable amount of permits include 13 in Fal-lon, 17 in Toole and 13 in Wibaux.

There were 13 gas permits issued in Montana in 2013, none of which were for Richland County. Eleven of those gas permits were issued for Big Horn County, one was for Phillips County and another for Rosebud County.

As of April 1, a total of 38 oil well permits have been issued in Montana this year. Out of the 38 permits, 22 were issued in Richland County. Also as of April 1, no gas permits have been issued this year.

When an oil permit is issued by the Montana Board of Oil and Gas, it is likely to get drilled. Jim Halvorson, geologist at the Board of Oil and Gas, said every once in a while it doesn’t, depending on circumstances and loca-tion.

“I would say right now any permits issued in Richland, Roosevelt County it’s likely they’ll get drilled...With the type of drilling going on and the fact that it’s mostly development drilling,” Halvorson said. “If the price of oil were to fall, that wouldn’t necessarily be the case.”

According to the U.S. Energy Infor-mation Administration, Montana’s statewide average monthly oil prices in 2013 ranged from $78.32 to $98.28 a barrel. A barrel of oil is the equiva-lent of 42 gallons.

“Their records indicate that the statewide average for 2013 was rela-tively stable with a little increase mid-2013,” Halvorson said.

Drilling outside of eastern Montana could occur more. In February, the Board of Oil and Gas approved a well in Belfry, about nine miles north of

the Elk Basin oil field (by the Montana Wyoming border).

The Board of Oil and Gas faces a lawsuit following the approval of the Belfry permit. Two conservation groups, the Northern Plains Resource Council and Carbon Resource Coun-cil, claim that the board’s approval process of the well in unconstitu-tional.

On Feb. 27, 10 landowners and

citizens gave testimony to the board about the dangers of drilling in a flood plain and information about the area’s flash floods, dry weather pat-terns and sandy soil. They also said there was insufficient wastewater pit lining.

The lawsuit was amended to include a claim that the 48-hour fracking warning is inadequate for affected citizens.

oil drilling remains steady in Montana

SUSan MinicHiello | Sidney Herald

An oil well site in Sidney. There were 125 oil permits issued in Richland County last year.

Page 37: Sh tappin the bakken may 14, 2014

Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 37

By SuSan MInIchIello

Sidney Herald

Before any oil drilling can be done, there are many steps. One of those steps is for oil companies to negotiate a purchase or lease of mineral rights.

Kaleb Dasinger of Monkota Pe-troleum Corporation, Sidney, is a landman — the middle man hired by oil companies to research mineral ownership, acquire mineral rights and negotiate deals.

“There’s a track book. You look at all the instruments, all the docu-ments that have passed the land throughout the years, and you determine who owns (it right now),” Dasinger said.

Once he finds out who the land owner is, Dasinger tracks them down and tries to buy a lease from them. He said, “It’s not extremely difficult. Every case is a little different.”

Necessary skills for a landman are good math, people and negotiat-ing skills, along with respect for both parties. Although he is usually representing a client’s interest, he occasionally purchases for his own company. When hired, he sometimes gets a cut of the profits, but most of the time he is paid a day rate.

“You talk to a lot of different people, which is fun, and I enjoy talk-ing to the farmers and the ranchers,” Dasinger said. “The larger interest owners are usually farmers and ranchers.”

In Montana, there are several types of mineral properties. According to a guide published by MSU Extension, a unified estate is when the owner owns both the mineral rights and the land surface. A split estate is when mineral ownership is separated from surface ownership. A fractional ownership is when the owner owns a percentage of the mineral rights.

When Dasinger approached min-eral and/or land owners, he makes small talk and says he likes to “take an interest in what they’re into, too.”

“That’s what gets the relationships started and most of these relation-

ships are gonna be a lot more than the initial lease, I’m hop-ing they’re gonna be lasting relation-ships,” Dasinger said. “I definitely want to get them the best deal they can get, as well.”

Like a true middle-man, when making a deal he consid-ers both sides of the coin. “Different people have different expectations of what they want when it comes down to even drilling — where they want the rig to be on their land.”

Landowners don’t always have a say on exactly where the drilling on their land will take place.

“We try as hard as we possibly can, most of the time, to make sure that they’re happy with everything... Most of the people that I work with are pretty good about it, but some companies aren’t. They’ll just go and do what they want to do for the most part,” Dasinger said. “They’ll always probably listen, but sometimes they’ve got their own agendas.”

Dasinger said he has luckily not been in too many conflicts with upset landowners. With cases of a split estates, the land owner doesn’t benefit very much from having an oil well on their property. Land owners are paid surface damages, but for some, it’s not worth it. In Dasinger’s experience, split estates don’t happen frequently, but when it does, it’s usu-ally when someone sells their land and reserves the minerals.

“Most of the areas in Richland County have had some sort of devel-opment over the years. So they’re going to have an idea, anyway, that it could be valuable down the road. I mean, I don’t think anyone would have ever thought it’d have been this big,” Dasinger said.

If a landowner owns the minerals as well, and an oil well is drilled on their property and the oil company thinks it will be a good well, land-owners can receive about 20 percent of the oil money. If it’s a higher risk

well, the owner would probably re-ceive a smaller slice of the pie, which may be closer to 16 percent.

It usually takes about five acres of land to drill an oil well, and oil companies have to pay surface dam-ages to landowners. Dasinger said landowners are usually compensated more than the market value of the land.

“They give them probably more than the land’s worth, but it is also kind of a hindrance…” Dasinger said. “It’s not like they just come in and give them nothing, they definite-ly give them something.”

Dasinger has worked as a landman for eight years, and has had consis-tent work in that time span. He noted that Montana’s oil activity started up again before the North Dakota boom.

He works in North Dakota, but for the most part stays in eastern Mon-tana, where he looks at land in Rich-land, McCone, Dawson, Musselshell, Roosevelt and Sheridan counties.

“I like to meet with [clients] for the most part, but a lot of it’s done over the phone,” Dasinger said. “It can never hurt anything to meet some-body face-to-face.”

There are a few other landmen in town including Brent Kallevig and Bakken Oil, which has a brokerage with several landmen who work for them. Dasinger said there isn’t a strong sense of competition between landmen in town because most of them stick to their own areas.

There are four people working at Monkota Petroleum Corporation, including Dasinger’s father, Kirby, who divides his time between Sidney and Billings.

“A lot of people don’t like [the oil boom], but at the end of the day, I think it’s going to eventually end (well), economically,” Dasinger said. “I think eventually the town will catch up and the structure will catch up, and Sidney will probably end up being a better place.”

[email protected]

landmen play important role in oil industry

Dasinger

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38 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

By SuSan MInIchIello

Sidney Herald

At an oil well site in Sidney on a sunny, but windy morning in March, Miranda Evenson pulls up in her dusty pickup truck. The jeans and navy blue hoodie she has on are fire resistant. Her long, brown hair under a worker’s hat is braided to the side, Katniss Everdeen-style, and tied with a pink band.

She spends about half an hour walk-ing around the oil well, which has treaters, pipes, a jack pump, a flare pit, among other things.

Evenson is a lease operator for Leg-acy Reserves, a small oilfield service company. She has worked there since September 2013.

“They’re a really good company, family-based. They’re really nice people,” Evenson said.

On a typical work day, Evenson wakes up a 6 a.m., and starts at a cou-ple of wells in the Fairview area that her company is contract pumping. She runs up to the top of the tanks and puts a strap gage into the tanks to read where the levels are at.

Her next stop is in Sidney where she heads to the Elm Coulee field and a few other wells in the areas. She grabs lunch, then heads to Glendive to check wells there.

Overall, she checks around 18-20 oil well and salt water disposal sites a day. At salt water disposal sites, she checks how much water is pumped.

“You check where your oil levels are at – make sure nothing’s leaking, make sure that you don’t have any spills on location, make sure you’re in compliance with state regulations and greenhouse gas stuff,” Evenson said. “Usually when something’s wrong, you catch it right away.”

If a line starts leaking or a thread on of the pipes breaks, Evenson grabs spare parts and fixes it. If something more critical happens, like a tank line breaks, a roustabout crew will come out and work together to fix that. Her company’s safety meetings are held in Beach, N.D. The last meeting was

on H2S training, where the staff was tested on their knowledge. A previous meeting was about trenching open holes.

Her schedule is 10 days on, four days off, so she has every other weekend off. Her shortest days are eight hours, her longest days are up to 16 hours. After long days, she said, “I want to go home and take a hot bath.”

Most of her time is spent driving. If all is well at an oil site, she’ll spend maybe 20-30 minutes there going from the treater to the well head and walk-ing around checking things.

A lease operator gets to spent quite a bit of their work time alone. “I’m not a big people person. I like just being by myself, thinking, listening to the radio. It’s kind of relaxing to me,” Evenson said. Her favorites to tune into are a country music and a radio classics station.

She noted there aren’t a lot of women working in the oil fields, which she called a “man-dominated job.” Evenson has experience working at Mitchell’s Oil Field Service and Oasis Petroleum.

“You definitely have to have the right kind of mindset to deal with guys that kind of make jabs some-times,” Evenson said. She has expe-

rienced some men make sexist jokes around her about how girls shouldn’t be in the oil field and their place is in the kitchen.

“It doesn’t really bother me. I grew up on a farm. I’m used to working hard,” Evenson said. “I grew up with all boys so I’m not really a girlie girl. I’m used to getting dirty.” Her father worked as an oil pumper. “Every once in a while, I’d ride around with him,” she said. “It pays good and I like being outdoors and being by myself.”

Having grown up on a farm and now working in the oil industry, Evenson is familiar with tension that sometimes occurs between the two industries. “Most farmers don’t mind. Most of them have mineral rights so they get lots of money from it,” Evanson said.

She recalled one time a pipeline was going across her family’s farm and wasn’t “packed tight enough,” so one spring hit the ground around the pipeline caved in around it. Her family was worried about their cows stepping in and possibly breaking a leg.

“Most companies are really good about, if you call in and say ‘this needs to be fixed,’ they’ll come out and they’ll work with the farmers,” Evenson said.

Woman finds lease operator role good one for her

SUSan MinicHiello | Sidney Herald

Miranda Evanson works as a lease operator for Legacy Reserves.

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Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 39

By SuSan MInIchIello

Sidney Herald

A second Canadian trade mission took place in Sidney March 16-17 with representatives of Saskatchewan companies participating.

Participants stayed at Eagles’ Land-ing temporary workforce housing facility near Sidney, where a welcome dinner was held. During dinner, Arnold Sherman, president of Global Development Services and executive director of the Montana World Trade Center, led an introductory presen-tation on businesses’ needs in the Bakken.

“There’s lots of opportunities here for creativity, innovation and entrepreneurship,” Sherman said. “I believe in the next 10 years we can become oil independent.”

Each dinner table had a Bakken “by the numbers” hand out, which stated the net profit of an average Bakken well is $20 million, with 75,000 new jobs created due to the boom. It also listed the North Dakota’s state surplus ($1.6 billion) and Montana’s surplus ($453 million).

Stephan Davis, a Canadian trade commissioner based out of Denver,

Colo., addressed participants. Davis aides Canadian companies in the U.S. His office covers Colorado, Utah, Wyoming, Montana and Kansas. The Canadian federal government has 16 trade offices across the U.S.

“With the exception of the border between Alaska and Canada, the border between Montana and Canada is the largest U.S. border of any state.

It covers three provinces,” Davis said. “I’ve done dozens of these trade mis-sions in the last 10 years; no one’s ever driven to one, so that in and of itself says something about the relationship that already exists between Canada and Montana.”

Davis added another reason a business relationship between the two countries is already in place is because Canada is the largest produc-er of Unites States energy. “The U.S. buys more energy from Canada than any place else in the world,” he said.

Liz Ching, business development specialist at Gov. Steve Bullock’s Of-fice of Economic Development in Bill-ings, told participants that this area “is the heart of the economic activity” in Montana. She explained “there are a number of programs we can put together to put forward what can be done to help infrastructure needs in the Bakken” and referred to Bullock’s visit with eastern Montana communi-ties last year.

“He is already gearing up for the 2015 legislature,” Ching said of the governor.

In addition, Ching encouraged Canadian companies to build business

SUSan MinicHiello | Sidney Herald

A second Canadian trade mission took place in Sidney and Williston, N.D. in mid-March. The group poses at KC Sandcastle and Transport in Sidney.

canadian trade mission group tours Sidney

SUSan MinicHiello | Sidney Herald

Arnold Sherman led the second Canadian trade mission in Sidney and Williston, N.D.

See traDe, page 40

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40 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

partnerships in Montana.Leslie Messer, Richland Economic

Development Corp. executive direc-tor, gave an overview presentation of the organization’s services, the area’s unique economic activity and her work with the Eastern Montana Impact Coalition.

As of this month, there are 13 oil rigs in Montana and 169 in North Dakota. There is a 2 percent unem-ployment rate Richland County, where the per capita income is higher than the rest of Montana and the United States.

Messer also thanked IAP Worldwide Services for building Eagles’ Landing in Sidney.

“They could have chosen anywhere, and they chose Sidney, Montana,” Messer said. “I can’t tell you how won-derful it is to have them here. They have a state of the art facility.”

Holle Thogersen, Eagles’ Landing’s business manager, gave a brief intro-duction of the workforce community to the participants. She explained how

the housing site doesn’t impede on the county since it is self sufficient with its own sewer lagoon. She also told the participants to help themselves to food in the cafeteria any time.

Currently, Baker Hughes is Eagles’ Landing’s biggest client, which has seen lower than expected occupancy in recent months. There are 350 beds built so far, and prospective tenants need to agree to a minimum 30-day lease. Thogersen said Eagles’ Landing is in the process of altering that rule in the near future, hopefully reduc-ing the required minimum days to a shorter amount.

That Monday morning, trade mission participants toured the KC Sandcastle and Transport facility in Sidney with Tom Pavek, human re-sources and safety director. Later that morning, they left for a ONEOK gas plant in North Dakota.

The rest of the trade mission took place in Williston, N.D. The group had dinner at the Bakken Club in Williston, which just opened a few months ago, where they listened to Cal Klewin, executive director of the Theodore Roosevelt Expressway,

speak. Tuesday was spent touring facilities around Williston.

The first Canadian trade mission happened in Sidney on Nov. 6, 2013 and in Williston on Nov. 7, 2013. The trade missions are the result of an agreement between Canadian ambas-sador Gary Doer and then U.S. Sen. Max Baucus, D-Mont., at the Montana Economic Development Conference held in Butte in September 2013.

Companies that participated in this week’s trade mission included Clifton Associates, Ltd., Croatia Industries, DynaIndustrial, EMQ Industrial, Ground Effects Energy, Mitsubishi Hitachi Power Systems, Morris In-teractive, Morsky Group, Noresman Structures, Quick Three Solutions Inc., Ram Industries, Team Power Solutions, United Centrifuge, Ltd. and Vale Solutions.

Also involved with the trade mis-sion were David Froh with the Sas-katchewan Trade and Export Partner-ship, along with Ed Wetherbee, Rachel Anderson, Paul Stock and Anthony Rodriguez of Global Development Holdings and Bakken Business and Investment Company.

trade: Missions part of agreement between country officialsFroM PaGe 39

SUSan MinicHiello | Sidney Herald

Arnold Sherman, right, introduces the group to the Bakken during an opening dinner at Eagles’ Landing “man camp” in Sidney. Canadian and American flags hang in the back.

SUSan MinicHiello | Sidney Herald

Liz Ching from the governor’s economic development office addresses the group.

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Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 41

MdU resources ceo provides keynote messageBy SuSan MInIchIello

Sidney Herald

David Goodlin, president and CEO of MDU Resources, Inc., was the key-note speaker at a dinner banquet held during the Montana Energy Confer-ence in Billings April 2.

“Our roots go back 90 years, and where it started was right on the North Dakota-Montana border in 1924,” Goodlin said. “Our roots go very deep in this area, long before the Bakken.”

MDU Resources is a regulated util-ity business, and is the largest natu-ral gas producer in Montana. The company first found natural gas in Glendive in 1928. From western Min-nesota out to the Pacific Northwest, MDU Resources serves about 870,000 retail customers.

Other operations by MDU Resourc-es include a pipeline in North Dakota and construction services. In the Bakken and the Powder River Basin, MDU Resources has interest in oil and gas. MDU Resources has 10,000 employees operating in 44 states.

Goodlin provided some background information on the Bakken for context. There are about 10,000 wells today in the Bakken. Annually, there are about 2,000 wells a year.

“This is a sustainable life. We’ve seen booms come and go,” Goodlin said. “This one has staying power.”

Goodlin also noted technology con-tinues to evolve in the Bakken. From spud to release, a new oil well used to take about 28 days, and today it has been cut in half, down to 14 days.

“We are now actually able to, as an industry, achieve up to 90 stage frack-ing in a 10,000 foot lateral, 9,500 feet under the earth,” Goodlin said. He noted that contributed to growth in oil production.

Another contributing method to efficient oil production is having mul-tiple wells per pad, and Goodlin said he observed some companies with 15-20 wells per pad.

“While you don’t have the geology

here in Montana, but you’ve got the proximity, and it’s totally on your side from all the business activity that really spins off and transporta-tion to labor to manufacturing, to all the support service it can provide,” Goodlin said. “Manufacturing in the oil patch, when you consider that what’s happening just not many miles to the east of us, is probably consid-ered the top five industrial projects in the world.”

He asked audience members to think of the opportunities in Mon-tana because of that.

“As a utility, I’m pretty excited about that,” Goodlin said.

MDU Resources has seen a 4.7 per-cent customer growth on its overall utility system. As a side note, Good-lin mentioned Montana’s 5 percent unemployment rate (which he called “phenomenal”) due to the economic boost from Bakken activity.

One investment MDU Resources is making (with a partnering company)is $350 million into America’s first greenfield refinery since 1976. It will be located four miles west of Dick-inson, N.D. The refinery will take Bakken crude at 20,000 barrels a day. Goodlin said the company aims to have it up and running by the end of the year.

Another issue Goodlin touched upon is natural gas flaring. His busi-ness proposition is a $650 million in-

vestment to put a natural gas pipeline out of the Bakken to northwestern Minnesota and get it to market.

He referred to President Obama’s State of the Union address two years ago, in which Obama stated the United States had a 100 year supply of natural gas. “I bet if his speech writers wrote that today, they’d have to add something to that because our natural gas discoveries keep growing and growing.”

Goodlin predicted natural gas prices will mostly remain stable with spikes now and then.

Richland County Commissioner Duane Mitchell asked Goodlin about the thought process behind MDU Resources deciding to build its green-field refinery in Dickinson.

Goodlin explained it was like real estate: location, location, location. The location is 104 miles from the Tesoro refinery, and 100 miles from a line in Glendive, two miles from a four-lane interstate and right across the road from a major oil terminal.

“So we’ve got multiple supply, mul-tiple outlets, we’re a little ways from the nearest competitor even though it’s an under starved market, and we think it’s nearby a community that we think can help house the 90-100 workers that we see operating this plant,” Goodlin said. “We put that all together and it seemed like the right area.”

SUSan MinicHiello | Sidney Herald

MDU Resources CEO David Goodlin said the Bakken oil boom has “staying power.”

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42 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

By SuSan MInIchIello

Sidney Herald

Unlike the “Real Housewives” reality TV series, the Oilfield Wives & Girl-friends Williston group in Williston, N.D. isn’t looking to make drama and broadcast it.

If anything, it’s the contrary: the group is a non-profit organization that serves as a community resource for wives of Bakken oil field workers to come together and participates in char-ity events.

The group was started in 2009 as a group of women who got together and

shared activities like going to the park for a walk with their kids. It began as just a handful of women who noti-fied each other about group activities though a group text. In the early days of the group, more personalized activi-ties like baby showers were organized.

“As we met more people, we started adding more people to the text list, and then it got too big for the text list,” Sha-leena Layton, secretary and treasurer, said.

A year later, the “Oilfield Wives Wil-liston ND” Facebook page was estab-lished, allowing for long distance wives and girlfriends of Williston oil workers

to stay engaged with the digital hub of ideas, tips and activities. As of April 12, the page has 1,867 followers.

The group’s Facebook page receives messages from women all around the country asking questions about pos-sibly moving to Williston and daily life — cost of living, schools, family activities.

“A lot of them are scared because they have heard scary stories,” Heidi McCormick, director, said. McCormick said the perception of crime in Wil-liston “is exaggerated.”

“When you have an influx of people

Real housewives of Williston

SUSan MinicHiello | Sidney Herald

Shaleena Layton, left, and Heidi McCormick sit at the Daily Addiction coffee shop in Williston, N.D. for their weekly meeting.

See WIveS, page 40

group functions as support system for oilfield significant others

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Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 43

coming into an area, it doesn’t matter where it is, your crime’s gonna go up because you have more people there,” Layton said. “You just have to use your common sense as far as your surround-ings.”

“I think it’s getting better because more families are coming now,” said McCormick, who noted more messages being sent from families to the group’s Facebook pages.

Every Monday at 1 p.m., the group meets for coffee at Daily Addiction in Williston. While there are some locals, the majority are new residents.

“We’ve met people at coffee from Indiana, from Texas, from Arkansas, from Missouri, Wyoming, Utah, Wis-consin,” McCormick said.

In the spring and summer time, there is a play group that meets every Friday at 11 a.m. at Davidson Park in Wil-liston. Every other Friday, the group hosts Girls’ Night for ladies only.

Girls’ Night is “pretty tame,” Layton said.

“We’re not out all night partying,” McCormick added.

They pick different restaurants, go out to dinner and talk. The number of women that come to Girls’ Night varies from five to 15 people.

McCormick called the group “a second family” and a good support network for women.

McCormick moved to Williston from Spokane, Wash. in 2009 with her hus-band and teenage daughter. The family sold their Spokane house, which they lived in for 11 years, and bought one in Williston.

“It was just the start of the boom. The prices had gone up a little, but they weren’t outrageous,” McCormick said.

McCormick’s husband supervises heating frack water. He usually works on Conoco locations. McCormick described her husband’s schedule as “24/7.”

“He’s not gone all those hours...He’s usually gone from seven in the morn-ing to 6:30 at night,” McCormick said.

The hours her husband works are actually reduced compared to before, when there wasn’t enough staff. He is

always on call, and if something were to happen, like a truck breaks down, he has to go.

“It’s a lot better but it’s still seven days a weeks, so that’s tough,” McCor-mick said. With her husband’s work schedule, weekend trips are impossible to plan. “The phone’s always ringing.”

Layton moved to Williston from central Wyoming, where she was born and raised. She and her husband have also lived in Utah, where he worked in the oil field. Layton’s mother-in-law is from Williston, so for her first year in Williston she lived with extended fam-ily, then in a company apartment. Last year, her family bought a house.

Layton has a 5-year-old son and is pregnant with her second child. Her husband does casing and, like McCor-mick’s spouse, is on call 24 hours a day, seven days a week.

McCormick and Layton are both homemakers and take an active role in the Oilfield Wives & Girlfriends Wil-liston group.

“I consider this Oilfield Wives (group) my job just because I keep everybody in order in the group,” Mc-Cormick said.

McCormick keeps track of the Face-book page, keeps updates posted, sells

T-shirts and hoodies with the group’s name on it and manages and promotes Oilfield Wives events.

The 2012 T-shirt is pink with an oil rig on it. It says “Building America’s future” on it.

Recently, the group just had the third annual Charity Ball, which raises mon-ey for the American Cancer Society. “It includes the community. Each year, it’s gotten a little bigger,” McCormick said. Businesses in the Williston community serve a sponsors and donate items for the silent auction, which brings in money along with ticket prices. Some promotional items are donated to them, and the city give them grant money for event expenses.

The first two years the Charity Ball was held at the Old Armory in Wil-liston, and this year it was held at the James Memorial Art Center in Wil-liston.

McCormick and Layton said the Williston community has been for the most part welcoming of the Oilfield Wives group and have received compli-ments from residents for their charity work.

“We want to give something back to the community,” Layton said.

Wives: group aims to ‘give something back to the community’FroM PaGe 42

SUSan MinicHiello | Sidney Herald

Heidi McCormick, director of Oilfield Wives & Girlfriends Williston, wears the group’s T-shirt during a coffee meeting.

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44 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

By SuSan MInIchIello

Sidney Herald

Montana Gov. Steve Bullock an-nounced a $45 million aid package for infrastructure in eastern Montana communities impacted by Bakken oil boom developments on April 17.

“This isn’t a be all end all to solve all of the challenges that we have, but it is something that can address some of those core pieces of what do we have to do to continue to make this com-munity so it will work?” Bullock said during his stop at Sidney’s City Hall.

Bullock made stops in Culbertson, Sidney, Glendive and Billings on the day of his announcement. During his time in Sidney, along with Chief of Staff Tim Burton, the governor explained the aid package to a group of more than 40 community leaders and residents. The crowd included all three Richland County commis-sioners, Sidney Mayor Rick Norby, Fairview Mayor Bryan Cummins, Rep. Scott Staffanson and some city council members, among others.

Grants from the aid package, called

the “Eastern Montana Impact and Infrastructure Project,” can go toward the planning, designing, repairment, improvement and expansion for water and wastewater treatment systems. Also eligible for the aid package is the payment of existing debt incurred on or after July 1, 2011, for water and wastewater systems.

Another initiative in the aid pack-age is the immediate reduction in the State Revolving Fund interest rate. For construction projects, the cur-

rent interest rate of 3 percent will be reduced to 1.25 percent. Also available to aid communities is local access Rapid Response Teams, expert techni-cal assistance in land use planning, affordable housing and the grant ap-plication process.

“I think it’s very exciting that the program is going to be launched to help us get some money on the ground and now, I guess, the greatest chal-lenge for economic development is learning the quickest way to actually get that money in our communities,” Leslie Messer, Richland Economic Development Corp. executive director, said.

The earliest eastern Montana com-munities will most likely see funds distributed is July 2015. The program will run for four years and cities, towns and tribal governments have to apply for the funds. The application is anticipated to be two pages long.

“Thank God he’s doing it,” Duane Mitchell, Richland County commis-sioner, said. “We need it.”

Mitchell noted all towns in Richland County have some kind of water or sewer issues. “Lambert’s got issues with water, Fairview’s got issues with water. Everybody in the whole

county,” Mitchell said. Sidney alone has infrastructure needs that exceed the amount of the aid package.

Sidney Mayor Rick Norby, who has been working with the governor since mid-November, said the governor’s announcement and meeting in Sidney “went very well.”

“It’s a very positive thing for us, especially with us going forward with what we’re doing with the lagoon. The bonding side, it’s going to make a considerable difference in the cost for our lagoon,” Norby said. “I like this, it’s good.”

During the meeting in Sidney, the governor mentioned communicating with Sidney Chief of Police Frank DiFonzo. About a year ago, DiFonzo asked for some state assistance for more agents to Sidney in light of the higher crime rate and more drug trafficking in the area. DiFonzo said the governor followed through, noting that Bullock understood crime issues since he formerly served as state at-torney general.

“I guess what I’m most impressed with him is that he hasn’t forgotten about us,” DiFonzo said.

[email protected]

Bullock announces $45 million aid package

SUSan MinicHello | Sidney Herald

Gov. Steve Bullock addresses questions from residents at Sidney City Hall after announcing his aid package.

‘It’s a very positive thing for us,

especially with us going forward

with what we’re doing

with the lagoon.’

rick norbySidney mayor

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Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 45

By SuSan MInIchIello

Sidney Herald

It’s no secret there isn’t enough pipeline infrastruc-ture in the Bakken to trans-port the booming amounts of oil and gas produced.

At the Montana Energy Conference in Billing this year, a panel was held on the afternoon of April 2 to discuss natural gas and crude pipeline activity, de-velopment and obstacles.

Representatives from natural gas pipeline compa-nies and one representative from Keystone Projects spoke to conference attend-ees about the importance of pipeline infrastructure.

Natural gas is a valuable energy resource, but in the Bakken oil fields, about 30 percent of it is burned off. If more pipeline infrastruc-ture were built, more natu-ral gas companies could benefit financially and a natural resource wouldn’t be flared off to waste.

SPectra enerGy lIquIDSDuane Rae called the

shale revolution “exciting,” even though “pipeline ca-pacity is not adequate right now in North America.”

Rae is president of Spec-tra Energy Liquids, a Hous-ton, Texas-based pipeline and midstream company that operates in Canada

and the United States. Rae described the company as “primarily gas infrastruc-ture,” with 19,000 miles of mainland gas transmission through pipeline, 39,000 miles of gas distribution and 305 billion cubic feet of storage capacity.

According to its website, Spectra Energy Liquids alongside transporting, storing, processing and dis-tributing natural gas, the company also transports crude oil. The company began transporting crude in March 2013.

“They have a big pres-ence in Montana,” Dave Galt, executive director of the Montana Petroleum

Association, said of Spec-tra Energy Liquids in his introduction.

One way the company is present in Montana is through the Express Platte system, which is actually a connection of two pipe-lines (Express and Platte). Express “primarily takes Canadian crude oil to feed the refineries in the Rocky Mountains,” including three refineries in Bill-ings. It goes from Hardisty, Alberta and climbs up to Casper, Wyo.

The Platte system con-nects to Express in Casper, and go downhill to Wood

panel discusses natural gas, crude pipeline development

SUSan MinicHiello | Sidney Herald

A natural gas flare pit in Richland County. Last July, it was reported that $100 million worth of natural gas is flared in Bakken monthly.

See Panel, page 46

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46 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

River, Ill. Some crude from the Express system goes through Platte, but about two thirds of the flow is Bakken crude.

Altogether, the Express Platte system is about 1,700 miles. The system also includes 44 storage tanks with 4.8 million barrels of total capacity, along with 38 pump stations.

Last summer, the com-pany sold out all of its available capacity to Mid-west refiners, among other, for an average term of 11 years.

Rae emphasized that the company values safety through a variety of pre-cautions, including testing and checking for erosion, annual system evaluation, and consistent monitoring.

“The reason we went out in the oil transportation business is we saw some-thing happening that really excited us. All this uncon-ventional crude oil growing in production across North America. The really inter-esting thing from a pipeline perspective is the growth was coming in areas that weren’t adequately served with pipeline infrastruc-ture,” Rae said. “We liked the opportunities that were offered to us in the crude oil business.

The two main natural gas pipelines owned by the company are the Sand Hills and the Southern Hills. The Sand Hills pipeline is 720 miles long and 20 inches wide. It accesses the Eagle Ford shale in Texas and serves it to the Gulf Coast and Mont Belvieu, Texas markets. The Southern Hills pipeline is 800 miles

long and 16-20 inches wide. It accesses natural gas from the mid-continent and also serves the Mont Belvieu market.

Rae compared North American crude oil prices. In 2011, a barrel of Bakken crude was worth $93 while a barrel of Alaska North Slope crude was worth $108.

“We’ve got significant price dislocations across the continent, and that’s a symptom of the mismatch in transportation capacity,” Rae said. “Pipeline trans-portation is inexpensive. On our system, you can get from Alberta here to Bill-ings for under $2. There’s a real opportunity, opportu-nity for the producers, op-portunity for the refiners.”

Another point Rae made

was that tradition crude oil flow patterns is changing due to shale oil produc-tion, with North American displacing offshore im-ports, which leads way for opportunities for crude oil transportation infrastruc-ture investment.

“The refiners in the U.S. are more reliant upon cheaper, more reliable, readily available North American crude,” Rae said.

Rae noted this change of flow and growth in oil production dramatically increased rail transporta-tion in the past two to three years.

“It takes a long time to get a pipeline approved and built,” he said.

One way rail and barges are enablers, not competi-

tors, as Rae explained, was the way those methods act as an extended pipeline. Thanks to those alterna-tive transportations, crude and natural gas can reach further markets. Rae said rail and barge were complementary assets for the industry and “really only increases the value of pipeline capacity.”

Ongoing plans for Spectra Energy Liquids include making sure its pipelines stay full by connecting rail and barge “wherever possi-ble” and expand terminals and storage for operational flexibility.

“What we’ve seen, espe-cially with Express, is rail really helped fill our pipe,” Rae said. “Lot of opportu-nity out there for the entire industry, and we’re actively pursuing it.”

oneokRepresenting ONEOK

at the natural gas panel was Kevin Burdick, vice president of natural gas gathering and processing at ONEOK.

“I’m very pleased to have ONEOK a part of Montana Petroleum Association and have a presence in Mon-tana,” Dave Galt said.

ONEOK Partners is a Tul-sa, Okla.-based company owned by ONEOK, Inc. The company’s core strategy is “connecting some of these very prolific supply places to market,” Burdick said, “and that’s what we’re re-ally out to accomplish as a midstream company.”

ONEOK’s natural gas gathering and processing assets, natural gas liquids assets and natural gas

Panel: growth of oil production increases rail transportationFroM PaGe 45

SUSan MinicHiello | Sidney Herald

Kevin Burdick, ONEOK vice presidnet of natural gas gathering and processing, discusses the company’s future in the Bakken.

See keyStone, page 47

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pipelines are primarily in the central United States, stretching from Mon-tana and North Dakota down to the tip of Texas.

Recently, ONEOK has focused its efforts more on the Williston Basin, where it is the largest independent operator of natural gas processing assets. ONEOK has 3 million acres in the Bakken.

“This is an interesting environ-ment. We’ve got our ONEOK team down here. They should receive huge accolades because when you start combining the weather, the terrain and the incredibly high liquid content of the gas, that poses a very challeng-ing operating environment,” Burdick said. “Our teams do it very safely, very reliably and very effectively, so kudos to them.”

In Montana, ONEOK has 1,500 miles of natural gas gathering pipelines, a small plant in Baker, a natural gas liquids (NGL) line that runs through eastern Montana and the Riverview Rail Terminal in Sidney.

“Our Sidney office is kind of the core office for all of our ONEOK Rockies operations, which not only includes the Williston Basin, but also some recently acquired assets in the Powder River Basin,” Burdick said.

Since 2010, ONEOK has spent near-ly $6 billion of capital in the Williston Basin, with about $2.5 billion toward natural gas gathering and processing. Three natural gas processing plants have been completed (along with related field infrastructure) and three more will be built.

One of the three ONEOK plants still under way is the Lonesome Creek Plant, which is scheduled to be com-pleted by early 2016. At that point, if all goes as planned, ONEOK will have 800 million cubic feet a day process-ing capacity in the basin.

“That’s eight-fold where we started in 2009,” Burdick said. “So we’re go-ing through huge growth to address the continuing drilling and activities that are taking place in the basin.”

Burdick also addressed natural gas

flaring, which he said “is a concern, especially on the North Dakota side at this point” and that “responding to this growth has been a challenge.” Burdick predicted that once the Lone-some Creek Plant is complete, flaring should be down to 10 to 15 percent.

“We’re very confident we’re going to be able to get there as this new asset comes into service,” Burdick said.

keyStone ProJectCorey Goulet, vice president of

Keystone Projects, spoke in favor of the Keystone XL Pipeline. Goulet has over 27 years of experience with energy infrastructure business.

“This is the safest and most efficient way of transporting petroleum prod-

ucts,” Goulet said. Later, he warned the crowd, “We can’t predict when we’re going to get a permit, so you shouldn’t try to, either.” The audience broke out in chuckles.

Goulet said North America will require over $6 trillion in energy in-frastructure investment between now and 2035, which “is roughly the size of China’s entire economy.” Of that $6 trillion, $2.5 trillion will be needed for oil infrastructure alone.

Echoing the same message as many Montana Energy Conference speak-ers, Goulet said the lack of energy infrastructure paves way for ample economic opportunity.

In the United States, Goulet said

keystone: officials feel pipeline is vital for energy securityFroM PaGe 46

SUSan MinicHiello | Sidney Herald

Corey Goulet, Keystone Projects, said the Keystone XL pipeline is “the safest and most efficient way of transporting petroleum products.”

See Goulet, page 48

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48 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

oil infrastructure investments are expected to contribute $94 billion to the country’s GDP each year from 2014 to 2025.

“That is equal to the annual eco-nomic contribution of the telecom-munication industry in the United States, so clearly there’s opportunity,” Goulet said. “Our TransCanada Key-stone pipeline system is our opportu-nity to take advantage of a $15 billion investment.”

The first two phases of the Key-stone XL Pipeline are in service as of 2010. Around 600 million barrels of crude oil have been transported to refinery through the first two Key-stone XL Pipeline phases currently in operation, which equates to $60 billion worth of crude.

The largest refining market in the United States is in the Gulf Coast, which has a capacity of 7.5 million barrels a day.

TransCanada Corporation has just completed its Gulf Coast project, a $2.3 billion pipeline from Cushing, Okla. to Nederland, Texas. Con-struction began in August 2012, and commercial deliveries began Jan. 22 of this year. The Gulf Coast pipeline has a capacity of 700,000 barrels a day, and when four more stations are add-ed its ultimate capacity will be 830,000 barrels a day. If fully completed, the Keystone XL pipeline system would be 2,151 miles across Canada and the U.S., with around 300 miles of it going through Montana.

“Keystone XL pipeline is the most well known and controversial pipe-line in the system,” Goulet said.

The latest application for the presi-dential permit for the Keystone XL pipeline was sent May 4, 2012. Nebras-ka Gov. David Heineman gave approv-al. It is a $5.3 billion investment and will take two years to construct.

“In the views of many, there’s no project more meaningful to the U.S. energy security than they Keystone XL Pipeline,” Goulet said. He stated energy independence as one of the main reasons why it should be built.

“Should Keystone XL not be built, oil sands production will continue and export to Asian markets will occur.Furthermore, the oil sands are the only growing supply source with land base connection to the U.S. market.”

Goulet also addressed the fact that environmental issues are in op-position to the energy industry. He referred to environmentalists as “our opponents.” He cited three inci-dents used by “opponents” to bring “fear and concern about the energy industry to the forefront of public consciousness.” The incidents were the 2010 Deepwater Horizon oil spill in the Gulf of Mexico (also referred to as the BP spill), the 2013 Enbridge oil spill in Kalamazoo, Mich. and the 2010 San Bruno, Calif. natural gas

pipeline explosion.“Today we find ourselves fighting

a huge battle on the Keystone XL Pipeline project, and that’s public perception,” Goulet said. “The public is being influenced by the media, environmentalists, politicians, neigh-bors and friends. This has greatly impacted the approval of the project, and has made it one of the most scru-tinized projects in North American history.”

Goulet encouraged conference at-tendees to bring awareness to “the critical role of energy and energy infrastructure in North America.”

Montana Gov. Steve Bullock sent a letter of support of the Keystone XL Pipeline on March 6.

FroM PaGe 47

SUSan MinicHiello | Sidney Herald

Tad True, Belle Fourche and Bridger pipelines, noted there has been a 90 percent oil production increase in the Bakken in the last 14 months.

See true, page 49

Goulet: Keystone Xl ‘most well known and controversial’

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Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 49

true: pipelines transport over 270,000 barrels of crude daily

Belle Fourche anD BrIDGer PIPelIneS

Tad True was the last speaker. True is vice president of Belle Fource and Bridger Pipelines, which operate ap-proximately 4,000 miles of crude oil pipelines primarily around Powder River and the Williston Basin. Cur-rently, with gathering systems and mainlines, the pipelines transport over 270,000 barrels of crude per day, the majority of which comes from the Bakken.

True began by talking about the Williston Basin. In a slide, he showed that Bakken oil production growth over the last 14 month has a 90 percent increase in production. His company operates the Enbridge

pipeline out of the Williston Basin. There are $1.6 million barrels a day of forecasted peak production coming out of the Bakken.

One development his company is working on is the Pony Express pipeline in northeastern Wyoming. Another is the Fort Laramie rail facil-ity right next to Guernsey, Wyo.

“If you look at an overall pipeline map of the Rockies, Guerney’s a natu-ral hub for the northern Rockies,” True said. “It’s a unique place, it’s an existing terminal that’s attached to six different pipelines coming from Canada, North Dakota, Montana, northwest Wyoming, southwest Wyo-ming and the Power River Basin, as well.”

The rail facility has an 80,000 barrel

a day capacity and it’s expandable to 160,000 barrels a day. Currently, around 20-25 trains are shipped there a month.

“With any of the incremental volume coming from...is going to be destined for rail. Any new pipe project that’s coming online — there’s none planned now, and any one that is planned is at least a couple years away,” True said. “I stopped making conclusions, and only making obser-vations.” His final observations are that rail transportation is an integral part of oil logistics and the increased production volume will make the Guernsey and Northern Rockies a more liquid market.

[email protected]

SUSan MinicHiello | Sidney Herald

A crude pipeline at an oil well site past the MDU Bridge in Sidney.

FroM PaGe 48

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By SuSan MInIchIello

Sidney Herald

The dining hall at Eagles’ Landing workforce housing community has four cooks working all hours of the day.

With some oil worker residents hav-ing unconventional work schedules, head chef D.J. Dearborff recalled serving a residents’ dinner at 1 a.m., and another time at 4 a.m.

“We’re buffing our butts to accom-modate them and make them happy, which we would do for all of our clients, as best as we can,” Dearborff, said.

Dearborff estimates about 87 to

90 percent of all the food served at Eagles’ Landing is made fresh. All of the food is delivered from the Food Services of America. He aims to make food healthy but tasty.

“When you’re looking at the food, you’re looking at us. We have barely anything pre-packaged, everything is made in-house as much as possible, from baked goods to food at the salad bar, it’s us. It’s not some nameless face in a factory,” Jason Ransom, fel-low chef and friend to Dearborff, said. “If the food is terrible, you can look at us and say, ‘the food is terrible.’ ”

Although the chefs are open to feedback, “the food is terrible” is not a line frequently heard in Eagles’

Landing’s dining hall. Most residents and visitors passing through give the chefs favorable reviews.

The food is served buffet style, which Dearborff said is not like most man camps. Ransom said the food is and lifestyle at Eagles’ Landing is bet-ter than other man camps.

“The life here is a lot better than it would be at anywhere else, as far as man camps go,” Ransom said. “This is the best you can get right now be-cause you have your own world. It’s a community here, it’s not just a bunch of trailers.”

“It’s not just oil and gas because the oil industry has so many things that

eagles’ landing chefs work to accommodate oil workers

SUSan MinicHiello | Sidney Herald

Jason Ransom, a chef at Eagles’ Landing, calls the “man camp” a community within itself. Ransom’s paychecks are four times higher than what he would make in his hometown of Atlanta, Ga.

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Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 51

have to be done. We’ve had surveyors in here, companies that do parts with the rigs,” Dearborff said. “Anybody can stay here, but we prefer big companies that want to bring their employees here, have a nice place to stay, have them taken care of. They never have to worry about where their meals are coming from.”

Occupancy at Eagles’ Landing hasn’t been as high as anticipated. Baker Hughes is currently a client at Eagles’ Landing. Ransom thinks the occupancy at Eagles’ Landing will increase after the new Fairview Refinery is built and if or when the Keystone XL Pipeline comes to frui-

tion. Ransom is from Atlanta, Ga. His

first cooking job was at age 16 at a Hardee’s. He has worked as a chef in remote areas and even had a stint as a sumo wrestler.

The positive economic effect of the oil boom attracted Ransom in, as well. Even though he doesn’t work directing in the oil industry, his pay at Eagles’ Landing is four time as much as he would make in Atlanta.

Ransom emphasized that Eagles’ Landing is a community within itself.

“It’s not a hotel, you come here and stay for awhile. People come in here, they watch TV, they shoot the breeze with their friends,” Ransom said. “It

definitely has that community feel be-cause it’s like you’re driving around the neighborhood.”

Ransom has observed other staff members of Eagles’ Landing going above their job duties. For example, he said Dearborff communicates with the bus driver that picks up Baker Hughes employees to better plan mealtimes, sometime picks up resi-dents from the airport in Williston, N.D. and buffs floors.

The chefs live on property and describe their kitchen atmosphere as having a good sense of camaraderie.

“People care, that’s the ultimate thing,” Ransom said. “We care about the quality of the food, the property.”

chefs: Future Bakken expansion may increase occupancy FroM PaGe 50

SUSan MinicHiello | Sidney Herald

Head chef D.J. Dearborff lives and works at Eagles’ Landing. He estimates around 87 to 90 percent of the food is freshly prepared.

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52 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

By SuSan MInIchIello

Sidney Herald

On April 1, Quantum Energy an-nounced plans to build a refinery in East Fairview, N.D. after a purchase agreement with Northstar Transload-ing.

The Fairview Refinery would sit on a 122 acre site adjacent to Northstar Transloading – a 400-acre rail facility.

“The refinery is a great opportunity for the region, for the state,” Neil Amondson, Northstar Transloading vice president and partner in the Fair-view Refinery project, said. “There’ll be a lot of merits to it for the city of Fairview, as well as Montana and North Dakota.”

Amondson estimated the refinery will cost between $250 million to $300 million. The refinery will border Montana.

“It will be a long-term, regional employer,” Amondson. “It’s a great neighbor to have. It’s not a big, smok-ing, smokestack industry. It’s a very efficient project...We see, in many respects, it will help reduce the safety issue.”

“It’s exciting because it will impact our area for sure,” Leslie Messer, Rich-land Economic Development Corp. executive director, told the Herald for a March 27 news article.

A Quantum Energy press lease stated that the Fairview Refinery will employ more than 100 employees.

There are still more steps in the regulatory process before the refinery can start begin construction. The location still needs a conditional use permit approved and an air permit from the state, which they are cur-rently working toward.

“That’s a very important step, it has to be done,” Amondson said. “All the checks and balances have to occur.”

The initial agreement between Northstar Transloading and Quantum Energy was for the Fairview Refin-ery to have an 80-acre site. Northstar Transloading has verbally agreed to make it bigger.

“Some of our recently announced plans prompted Northstar to initi-ate discussions for us to acquire an additional 42 plus acres contiguous to the 80 acres we already have under contract,” Andrew Kacic, Quantum CEO, said in an April 1 press release.

The Fairview Refinery is the fifth proposed oil refinery in North Dakota since the oil boom began. The United

States hasn’t had a new oil refinery built in 30 years.

Just outside of Dickinson, N.D., the Dakota Prairie Refinery is being con-structed by MDU Resources and Calu-met Specialty Products LP. Amondson commented, “This’ll be comparable to that.”

Similar to the Dakota Prairie Refin-ery, the Fairview Refinery will also process 20,000 barrels of crude and produce 7,000 barrels of diesel a day. There is around 60,000-70,000 barrels of diesel a day total in the Bakken, and around 80,000 barrels of crude is transported out of the Bakken by rail daily.

The refinery will take approxi-mately two years to build, with winter weather considered.

“We’re also excited about our project, getting Northstar started,” Amondson said. Northstar Transload-ing plans to begin construction on April 21. “We have a busy schedule ahead of us.”

First in 30 yearsoil refinery planned near northstar Transloading facility

SUSan MinicHiello | Sidney Herald

The U.S. has not had a new oil refinery built in 30 years. The Bakken has energized the industry enough to prompt five proposed refineries, including one in Fairview.

‘there’ll be a lot of merits to it

for the city of Fairview, as well

as Montana and north Dakota.’

neil amondsonnorthstar Transloading

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Sidney Herald’s Tappin the Bakken Sunday, May 18, 2014 53

By SuSan MInIchIello

Sidney Herald

With the energy industry in the Bak-ken dependent on rail transportation, and safety measures called into ques-tion following a series of explosive and fatal accidents, rail is a hot topic.

George Duggan, group vice presi-dent of the Coal Business Group and a leader in BNSF’s coal sales and marketing team, addressed rail safety in the context of oil and coal trans-portation, during an exhibit session at the Montana Energy Conference in Billings on April 2.

“As the governor said this morning, there is a lot of things happening up here in this part of the country, and we are a very integral part of it, as all of you are,” Duggan said.

In Montana, BNSF employs 2,000 people and moves nearly 2 million carloads a year through the sate. There are four main commodities hauled through the Montana by BNSF: coal, industrial, consumer and agricultural. In 2013, around 342,000 carloads were shipped out of the state, and 33,000 carloads were shipped in.

“Montana and this area is very, very important to BNSF Railway,” said Dug-gan, who estimated the railway to have been in Montana since the 1870s. “We were part of the push west; Montana was a critical part of that.”

Duggan noted there is a high de-mands for a lot of commodities. BNSF is spending $5 billion to increase capacity to haul more commodities.

“We need that $5 billion to handle the growth that we’re experiencing,” Duggan said. A portion of that money – around $1.5 billion — will be spent on locomotives and freight cars.

In 2010, 74 percent of oil produced in the Williston Basin was transported out to refineries by pipeline, and only 6 percent was transported by rail. In 2013, the numbers changed dramatical-ly with 72 percent of oil transported by rail, and only 21 percent transported by pipeline. Oil makes up less than 5 percent of commodities hauled by BNSF, and coal is about 20 percent.

“Coal turns the lights on, and because that turns the lights on, it pro-vides a basic social welfare...” Duggan said. Around 40 percent of electricity in the United States is generated from coal, and Duggan noted “we need all kinds of energy to turn the lights on.”

Around 5,000 new employees will be hired by BNSF this year because of the growth in energy transportation by rail.

“We are obligated to haul every-body’s stuff and that’s what we strive to do. So whether it’s a carload of grain, carload of coal, carload of oil, it comes to us in all forms and we move all of it,” Duggan said. “We feed the world from an agricultural perspec-tive.”

There are 650,000 to 700,000 barrels

of oil are transported out of the Bak-ken daily, or about eight oil trains a day. (Compared to 55 coal trains trans-ported a day).

Once oil leaves the Bakken on rail, there are multiple destinations it could potentially end up, mostly refineries by the coasts. Duggan cited refineries in the East Coast and Cali-fornia, eight destinations in the Pacific Northwest and 12 destinations on the Gulf Coast.

In one slide of Duggan’s presenta-tion, Bakken crude-by-rail origin growth was shown on a map of the MonDak region with unit train facili-ties marked with their origin date. The first one was in Stanley, N.D. on Dec. 1, 2009, and the most recent one was in

rail transport hot topic for oil industry

SUSan MinicHiello | Sidney Herald

University of Montana president Royce Engstrom, center, attends the rail session.

See raIl, page 54

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54 Sunday, May 18, 2014 Sidney Herald’s Tappin the Bakken

Gascoyne, N.D. on Aug. 11, 2013. The closest ones to Sid-ney were the train facilities in Dore, N.D., established March 2012, and the one in Trenton, N.D., established April 2012.

A total of 21 train facili-ties in the Bakken served by BNSF were shown. Across the entire country, BNSF serves more than 30 crude by rail facilities.

Duggan mentioned BNSF’s proposal to manu-facture and use “next gen-eration” tank cars to trans-port crude oil. The tank cars have improved safety features, including thinker steel casing and a thermal protection system. Reports show that BNSF proposed to have 5,000 of them. Duggan noted it would be at least a couple of years before any “next generation” tank cars would come into fruition.

“We have to make sure that we’re working together to do everything we can to continue the safe transport of all of our commodities, particularly with crude,” Duggan said.

Mike Tooley, director of the Montana Department of

Transportation, served as the moderator for the ses-sion. “We work with BNSF a lot,” Tooley said.

Although the conference was attended by more than 1,000 people, the session had around 50 people pres-ent, as there were multiple sessions with other energy-related topics conducted simultaneously.

During a question and answer session following Duggan’s presentation, an audience member inquired about how crude should be classified prior to being transported on rail. Duggan explained that crude clas-sification is determined by the federal government, not BNSF.

“That’s going through the regulatory process right now, so that’s yet to be deter-mined,” Duggan said.

That’s not entirely true — classification of crude has been determined, On March 6, in a fourth emergency order or safety advisory on crude oil by rail, the U.S. De-partment of Transportation put into effect mandatory crude classification.

The emergency order was in response to concerns

found from a Department of Transportation inves-tigation called Operations Classifications (commonly referred to as “Bakken Blitz”), where unannounced inspection of crude oil la-bels on trains in the Bakken were conducted.

Another question asked was how more pipeline infrastructure in the future would affect rail.

“We think the pipeline networks needs to be as robust as the rail network,” Duggan said. “There’s room for all of us.”

rail: crude classification determined by federal governmentFroM PaGe 53

SUSan MinicHiello | Sidney Herald

Pat Duggan, BNSF, said rail and pipeline were equally important.

SUSan MinicHiello | Sidney Herald

The Montana Energy Conference was attended by over 1,000 people and included a trade show open to the public.

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